Riding the Crest of a New Wave: How the Original SaaS Companies Have Gained the Upper Hand (A Procurement Insights Knowledge Leadership Publication)

Posted on March 20, 2009


Out In Front of the Paradigm Shift

“With tier one vendors such as Ariba and SAP moving into the SaaS space, a model upon which organizations such as Source One’s reputation and business have been built, it is in effect an admission that the traditional licensing model does not work.

Because of what can only be described as a monumental shift (remember the old analogy about big ships turning slowly), overall awareness and acceptance for SaaS-based or on-demand solutions is on the rise.  And with it, the players who are and have already defined this new paradigm.”

Excerpt from “Riding the Crest of a Wave: How the Original SaaS Companies Have Gained the Upper Hand” White Paper (March 2009).

As a confirmed “Blogger” I tend to always keep my hand on the pulse of the medium by including a weekly review of blog activity as part of my regular research process.  A process that includes a daily read of white papers, articles, industry reports and of course more traditional “electronic” trips to the various Internet libraries and resource centers.  

So it probably would not surprise you that a 2007 post in the B2B Marketing ROI Blog by Adam Blitzer titled “the end of installed software” caught my eye. 

Referring to an earlier prediction made by Seth Godin regarding the traditional software model’s demise as “hitting the nail on the head,” one could not help but wonder how far the SaaS or on-demand concept actually went back in terms of “collective” mainstream consciousness.

While many of the original SaaS organizations such as Source One have been around for as long as 25 years, when did this new model actually appear on the horizon for the rest of us?

Enter a year 2000 white paper titled “Strategic Backgrounder: Software as a Service” by the Software & Information Industry Association’s (SIIA) eBusiness Division.  (Note: while written in 2000, the paper was not actually published until 2001.)

In its opening paragraph, this seminal effort to explain the evolution from traditional licensing models in which “packaged desktop and enterprise applications will soon be swept away by the tide of Web-based, outsourced products and services,” accurately establishes the core principles or elements of the SaaS or on-demand model.  Specifically, that the new model will “remove the responsibility for installation, maintenance and upgrades (and the associated heavy costs) from over-burdened MIS staff.”  And that as a result, “packaged software, as a separate entity will cease to exist.”

In my Riding the Crest of a New Wave paper I concluded that “Even though the SIIA report at the time of its publication stressed that “due to technical and business issues, such drastic predictions,” had not yet happened, it nonetheless sent up the first flare indicating that a change was definitely on the horizon.  A change that has in fact affected all participants in the software industry.”

And while Source One’s indigenous expertise, which has been built on a long history of producing “proven” results, actually extends beyond the capabilities of a SaaS or On-Demand model, this white paper will focus on the onerous costing structure of “traditional” enterprise software vendors like Ariba, SAP and Oracle, and their consistently high implementation failure rates, as two of the primary reasons for their pending migration to the SaaS world.

In the process, I will present the findings that support my belief that the migration for these tier one vendors may actually signify a step into a Covisint-type oblivion, as they are now operating within the domain of the original SaaS players like Source One.  A domain within which the latter is both well-versed and “technologically seasoned.”

I think that you will agree that this will be one of the more interesting reads.           

Use the following link to access the paper in its entirety: http://www.slideshare.net/piblogger/riding-the-crest-the-original-saas-companies


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